Entrepreneurship & Small Business

Is this wording legal in a quote/contract? Penalty for late delivery terms

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  • Dec 16th, 2022 4:13 pm
[OP]
Newbie
Aug 24, 2021
91 posts
151 upvotes
Markham

Is this wording legal in a quote/contract? Penalty for late delivery terms

I am ordering something from a supplier which they assured will arrive by X date 2023. As I think there is a possibility that they can't do the delivery by the date, and only said they can so that I order from them instead of a different supplier, we verbally agreed over the phone to have a penalty for delays.

In the payment terms, I added a clause stating that there will be a 10k penalty per week of delay, which was agreed to. However I am wondering if this is actually enforceable, if they are 2 weeks late and I take off 20k, can they take me to court over this?
6 replies
Deal Addict
User avatar
Jan 19, 2007
1380 posts
723 upvotes
Torontario
On what INCO terms you agreed on?
I assume we talk physical goods here....
[OP]
Newbie
Aug 24, 2021
91 posts
151 upvotes
Markham
ohnabatko wrote: On what INCO terms you agreed on?
I assume we talk physical goods here....
Yes I am ordering steel, the contract states that we will need all of the steel specified in the contract delivered by X day essentially, and that there would be a 10k penalty per week even if they are late by 1 day. It's actually not urgent for us to get the steel on time, but I just hate it when someone lies to get a contact and added these terms.
Sr. Member
Jul 8, 2009
731 posts
312 upvotes
Toronto
Did they read and sign the contract?

Anyone can take you to court over anything, but if it's as you described, then they would lose. You're attaching a penalty for late performance. I don't see how it could be invalid, except perhaps if it is ridiculously high and the penalty becomes more than the cost itself.
Deal Addict
User avatar
Jan 19, 2007
1380 posts
723 upvotes
Torontario
aaaaaaaa wrote: Yes I am ordering steel, the contract states that we will need all of the steel specified in the contract delivered by X day essentially, and that there would be a 10k penalty per week even if they are late by 1 day. It's actually not urgent for us to get the steel on time, but I just hate it when someone lies to get a contact and added these terms.
Smiling Face With Open MouthSo no inco terms - interesting approach. so freight, insurance or duty?

Here's a link to what I mean: https://incodocs.com/blog/incoterms-202 ... ete-guide/.
I think any whole-seller by default will quote you FOB.

So prepare to be right
[OP]
Newbie
Aug 24, 2021
91 posts
151 upvotes
Markham
ohnabatko wrote: Smiling Face With Open MouthSo no inco terms - interesting approach. so freight, insurance or duty?

Here's a link to what I mean: https://incodocs.com/blog/incoterms-202 ... ete-guide/.
I think any whole-seller by default will quote you FOB.

So prepare to be right
Great thanks I will take a look. By the way, we are not ordering internationally, the supplier is a Canadian division of a Chinese company, so we are technically dealing with a Canadian company. We are using a CCDC contract as they will not only deliver, but install the steel as well.
[OP]
Newbie
Aug 24, 2021
91 posts
151 upvotes
Markham
In case anyone cares, the supplier verbally agreed, but refused to sign the contract due to this clause and we went with another supplier.

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